2p fuel price surge expected to increase

2p fuel price surge expected to increase
Prices at the pump shot up by more than 2p a litre in August – rises predicted to be just the “tip of the iceberg”.

Affected in no small part by the devastating Storm Harvey, which has severely disrupted oil production on the US Gulf Coast, unleaded went up by 2.26 a litre while diesel was 2.28p a litre more by the end of the month.

Standing at 117.51p and 118.37p a litre respectively, both fuels increased in price for the second month in a row and are expected to rise higher.

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Commenting on the latest RAC Fuel Watch report, fuel spokesman Simon Williams said: “Sadly, fuel prices went up for the second consecutive month in August, but the 2p a litre increase is unfortunately just the tip of the iceberg as motorists are likely to see further forecourt rises in the next week as a result of the disruption to oil refiners in Texas.”

Between Harvey hitting the US on August 25 and the end of the month, the wholesale price of unleaded rocketed by 4p a litre, as oil refining facilities were waylaid.

Crude oil rose by 4%, averaging $51.44 over the month, while the exchange rate also fell by 3% over the course of August.

Mr Williams added: “While the price of producing petrol tends to be primarily affected by the cost of crude oil and the exchange rate as it’s traded in dollars, it is also affected by global market forces for the refined product itself and we often see the price move up and down according to supply and demand issues.

“This has been the case since Storm Harvey as petrol is now in shorter supply. It has also been compounded by a drop in the region’s crude oil production.”

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The latest reports from the States do suggest that damage to oil infrastructure caused by the storm is expected to be lesser than feared.

“Despite this,” Mr Williams says, “pump prices in the UK will no doubt rise in the coming days and we still expect to see the price of petrol overtake that of diesel, although the wholesale price of diesel is also starting to increase.

“This, together with an early month rise in the oil price, means the outlook for fuel prices in September is not good.”

RAC Fuel Watch data for August showed the cost of filling a typical 55-litre family car went up to £64.63. A similar-sized tank of diesel increased by the same amount (£1.25) to £65.10.

Copyright Press Association 2017. Motoring News articles do not reflect the RAC's views unless clearly stated.